Gibson Energy Inc. Reports Record Financial Results for 2011

Mar 06, 2012

All financial figures are in Canadian dollars unless otherwise noted

CALGARY, March 6, 2012 /CNW/ - Gibson Energy Inc. ("Gibson" or the "Company"), TSX: GEI, today reported record results for 2011 supported by increases in segment profit1 across all operating segments.

Adjusted EBITDA in the three months ended December 31, 2011 increased by 19% to $67.3 million compared to $56.7 million in the three months ended December 31, 2010.  2011 Adjusted EBITDA2 increased by 52% to $231.3 million compared to $152.6 million in 2010. Pro Forma Adjusted EBITDA3 for the year ended December 31, 2011 was $237.0 million.

Cash provided by operations in the three months and year ended December 31, 2011 was $35.9 million and $207.3 million, respectively, compared to $43.9 million and $132.4 million in the three months and year ended December 31, 2010, respectively.

"I am very proud of our unprecedented 2011 financial and operating results," said Stewart Hanlon, President and Chief Executive Officer. "We are executing effectively on our growth plans while generating stable and growing cash flow for our shareholders and providing integrated midstream solutions for our customers."

For the three months ended December 31, 2011, segment profit increased by 18% to $74.7 million compared to $63.1 million in 2010 and by 50% to $256.7 million in the year ended December 31, 2011 from $171.6 million in the year ended December 31, 2010.

All of Gibson's operating segments experienced volume increases in 2011. An additional $143.0 million was spent in 2010 and 2011 on internal growth projects to support the provision of midstream solutions to Gibson customers doing business in key market areas. The addition of rolling stock in Canada and the U.S., construction of four new connections at the Hardisty and Edmonton Terminals and the purchase of trucks, tanks and generators by the Company's retail propane business helped to achieve these volume increases.

Increased crude oil prices and production levels have added to demand for many facets of the midstream energy value chain in which Gibson participates. This has allowed for hauling rates to be increased in Truck Transportation and for increased sales of Distillate 822 drilling mud within the Processing and Wellsite Fluids segment.

In 2011 the Marketing, Terminals and Pipelines and Processing and Wellsite Fluids business segments benefitted from the widening of heavy to light crude oil pricing differentials from historically low levels experienced in the first nine months of 2010. Marketing and Custom Terminals captured the benefit through the arbitrage opportunities created, while the Processing and Wellsite Fluids segment experienced reduced feedstock costs resulting in higher margins for their products.

"Gibson spent approximately $290 million on acquisitions over the course of 2010 and 2011 and we are seeing the benefits of those expenditures," said Mr. Hanlon. "Terminals and Pipeline's segment profit has increased due to the acquisitions of Battle River Terminal and Palko Environmental, while the Truck Transportation segment's results increased, in part, due to the full year impact of the Taylor acquisition in the U.S."

Corporate Highlights for the Year Ended December 31, 2011:

  • On June 15, 2011, the Company completed an initial public offering of its common shares for gross proceeds of $500.0 million. Subsequently, the Company completed two secondary offerings of common shares of the Company held by R/C Guitar Cooperatief U.A. ("Co-op"), a Dutch cooperative owned by investment funds affiliated with Riverstone Holdings LLC, for total gross proceeds to Co-op of $581.6 million. Following the secondary offerings, Co-op owns approximately 29% of the common shares of the Company;
  • Capital expenditures, in 2011, were $148.0 million of which $111.4 million related to internal growth projects. Internal growth project expenditures are primarily related to the construction of tanks and pipeline connections at the Company's terminals and the expansion of the Truck Transportation and Canwest Propane fleets;
  • The Company completed and commissioned the Enbridge Line 4 and Cold Lake pipeline connections at the Company's Hardisty Terminal;
  • The Company entered into a long-term service agreement with a major customer providing the customer with the use of a storage tank at its Hardisty Terminal. As a result, all four tanks acquired as part of the Company's acquisition of Battle River Terminal ULC have been leased out to customers on a long term basis with each agreement providing for fixed monthly fees plus additional usage fees based on monthly volume throughput;
  • On August 11, 2011, the Company entered into a partnership agreement to jointly construct and own a pipeline and an emulsion treating, water disposal and oilfield waste management facility in the Plato, Saskatchewan area;
  • On December 8, 2011, the Company completed the acquisition of all of the issued and outstanding shares of Palko not already owned by the Company for consideration of approximately $51.8 million of which approximately $5.8 million was paid as cash consideration with the remainder through the issuance of 2.4 million common shares of the Company. This investment, together with the development plans for the Company's Rimbey custom terminal and the Plato facility described above, will expand the Company's Canadian custom terminal operations to include emulsion treating, water disposal and oilfield waste management services; and
  • The Company declared two series of dividends totaling $0.52 per common share for total dividends of $49.6 million, of which $28.8 million was settled with the issuance of common shares to shareholders participating in the Company's dividend reinvestment plan with the remainder being settled in cash.

MD&A, Financial Statements & Notes

The Management's Discussion and Analysis and the December 31, 2011 Consolidated Financial Statements provide a detailed explanation of Gibson's operating results for the year ended December 31, 2011 as compared to the year ended December 31, 2010. These documents are available at www.gibsons.com and at www.sedar.com.

2011 Fourth Quarter and Year End Results Conference Call

A conference call to discuss Gibson's fourth quarter and year end results will be held at 7:00 a.m. MT (9:00 a.m. ET) on Wednesday, March 7, 2011 for interested investors, analysts and media representatives.

The conference call dial-in numbers are:

  • 1 -866-696-5910 from Canada and the US;
  • 416-340-2217 from Toronto and International;
  • Participant Pass Code: 5780411.

Shortly after the call, an audio archive will be posted on the Investor Relations and Media section at http://www.gibsons.com.

The call will also be recorded for playback 60 minutes after the meeting end time, until September 7, 2012, using the following dial in process:

  • 905-694-9451 / 800-408-3053;
  • Pass code: 2662064.


(1) Segment profit is defined as revenue minus (i) cost of sales; and (ii) operating costs. It excludes depreciation, amortization, impairment charges, stock based compensation and corporate expenses.
(2) Adjusted EBITDA is defined as consolidated net income (loss) before interest expense, income taxes, depreciation, amortization, other non-cash expenses and charges deducted in determining consolidated net income (loss), including movement in the unrealized gains and losses on the Company's financial instruments, stock based compensation expense, impairment of goodwill and intangible assets, and non-cash inventory write-downs. It also takes into account the impact of foreign exchange movements in the Company's U.S. dollar denominated long-term debt, management fees, debt extinguishment costs and other adjustments that are considered non-recurring in nature.
(3) Pro Forma Adjusted EBITDA differs from Adjusted EBITDA in that it also includes the pro forma effect of acquisitions that took place in each fiscal year as if the acquisitions took place at the beginning of the fiscal year in which such acquisitions occurred.

Forward-Looking Statements

Certain statements contained in this news release constitute forward-looking information and statements (collectively, Forward-looking statements"). These statements relate to future events or the Company's future performance. All statements other than statements of historical fact are forward-looking statements. The use of any of the words "anticipate", "plan", "contemplate", "continue", "estimate", "expect", "intend", "propose", "might", "may", "will", "shall", "project", "should", "could", "would", "believe", "predict", "forecast", "pursue", "potential" and "capable" and similar expressions are intended to identify forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. No assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this news release should not be unduly relied upon. These statements speak only as of the date of this news release. In addition, this news release may contain forward-looking statements and forward-looking information attributed to third party industry sources. The Company does not undertake any obligations to publicly update or revise any forward looking statements except as required by securities law. Actual results could differ materially from those anticipated in these forward-looking statements as a result of numerous risks and uncertainties including, but not limited to, the risks and uncertainties described in "Forward-Looking Statements" and "Risk Factors" included in the Company's Supplemented Prep Prospectus dated June 7, 2011 as filed on SEDAR at www.sedar.com and available on the Gibson website at www.gibsons.com.

This news release refers to certain financial measures that are not determined in accordance with International Financial Reporting Standards ("IFRS"). Adjusted EBITDA and Pro Forma Adjusted EBITDA are not measures recognized under IFRS and do not have standardized meanings prescribed by IFRS. Management considers these to be important supplemental measures of the Company's performance and believes these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in its industries with similar capital structures. See "Summary of Quarterly Results" in the Company's MD&A for a reconciliation of EBITDA to net income (loss), the IFRS measure most directly comparable to EBITDA, and for a reconciliation of Adjusted EBITDA and Pro Forma Adjusted EBITDA to EBITDA. Investors are encouraged to evaluate each adjustment and the reasons the Company considers it appropriate for supplemental analysis. Investors are cautioned, however, that these measures should not be construed as an alternative to net income (loss) determined in accordance with IFRS as an indication of the Company's performance.

 Fourth Quarter and Year End - Selected Financial Highlights
         
       
  Three months ended
December 31,
 
Year ended December 31,
  2011   2010   2011   2010
    (in thousands)  
           
Segment Profit:        
Terminals and Pipelines $22,309   $14,409   $72,081   $40,842
Truck Transportation 19,655   14,698   68,613   53,602
Propane and NGL Marketing and Distribution 14,532   12,662   40,385   34,848
Processing and Wellsite Fluids 9,607   10,185   46,905   34,143
Marketing 8,552   11,143   28,674   8,132
Total Segment Profit 74,655   63,097   256,658   171,567
               
Statement of Cash Flows Data:              
Cash flows provided by (used in):              
Operating Activities $35,912   $43,938   $207,317   $132,434
Investing Activities (42,865)   (11,236)   (83,880)   (281,200)
Financing Activities (35,935)   (50,919)   (66,853)   128,907
               
Other Financial Data:              
Capital Expenditures:              
Internal Growth Projects $34,018   $11,364   $111,352   $31,642
Upgrade and Replacement Capital 7,702   9,590   36,686   32,630
Acquisitions 51,788   -   51,788   236,525
               
Adjusted EBITDA $67,345   $56,688   $231,283   $152,570
               
Pro Forma Adjusted EBITDA         $237,022   $162,359
               

 

 

 

For further information:

Ken Hall
Vice President Investor Relations and Communications
(403) 781-2899
ken.hall@gibsons.com